Correlation Between Lincoln Educational and Stepstone
Can any of the company-specific risk be diversified away by investing in both Lincoln Educational and Stepstone at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lincoln Educational and Stepstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lincoln Educational Services and Stepstone Group, you can compare the effects of market volatilities on Lincoln Educational and Stepstone and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lincoln Educational with a short position of Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Educational and Stepstone.
Diversification Opportunities for Lincoln Educational and Stepstone
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lincoln and Stepstone is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Educational Services and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group and Lincoln Educational is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lincoln Educational Services are associated (or correlated) with Stepstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepstone Group has no effect on the direction of Lincoln Educational i.e., Lincoln Educational and Stepstone go up and down completely randomly.
Pair Corralation between Lincoln Educational and Stepstone
Given the investment horizon of 90 days Lincoln Educational Services is expected to generate 1.21 times more return on investment than Stepstone. However, Lincoln Educational is 1.21 times more volatile than Stepstone Group. It trades about 0.1 of its potential returns per unit of risk. Stepstone Group is currently generating about 0.09 per unit of risk. If you would invest 546.00 in Lincoln Educational Services on September 3, 2024 and sell it today you would earn a total of 1,097 from holding Lincoln Educational Services or generate 200.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lincoln Educational Services vs. Stepstone Group
Performance |
| Timeline |
| Lincoln Educational |
| Stepstone Group |
Lincoln Educational and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Educational and Stepstone
The main advantage of trading using opposite Lincoln Educational and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Educational position performs unexpectedly, Stepstone can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Stepstone will offset losses from the drop in Stepstone's long position.| Lincoln Educational vs. Vasta Platform | Lincoln Educational vs. Laureate Education | Lincoln Educational vs. American Public Education | Lincoln Educational vs. Adtalem Global Education |
| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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